Where is ETH headed after gaining 7% weekly?

Ethereum has reached a decisive point at the neckline of the head and shoulders and the crucial 100-day moving average. A potential breakout will likely lead to a significant rally due to a massive short liquidation cascade.

Price action over the next few days will play a crucial role in determining the broader outlook for ETH.

Technical Analysis

By Shayan

The daily chart

Ethereum has reached a decision point at a crucial resistance region consisting of the neckline of the head and shoulders and the 100-day moving average at $2.7 thousand. Price action in recent days has shown low volatility sideways movement, reflecting a state of balance between buyers and sellers. This indicates indecision in the market, with neither side able to take control.

If Ethereum can break above this key resistance zone, it would confirm the completion of the H&S pattern, indicating a possible mid-term bullish trend. A successful breakout would also mean the asset retook the 100-day MA, reinforcing bullish momentum. In this scenario, Ethereum price could target the $3,000 threshold, another major resistance level.

However, this area is full of supply, and if not breached, it can cause a rejection, halting any upward movement. Therefore, the upcoming price action will be critical in determining the broader outlook for Ethereum.

The 4 hour chart

On the 4-hour chart, Ethereum is showing a sideways consolidation near the resistance zone bounded by the Fibonacci retracement levels of 0.5 ($2.6K) and 0.618 ($2.7K). This area has been a challenge for buyers, with several previous attempts to break it down rejected due to significant selling pressure.

Additionally, a slight bearish divergence is emerging between price and the RSI indicator, suggesting a gradual increase in sellers’ power. This could indicate an imminent rejection of the resistance zone, triggering a decline towards the $2.3k support level.

Conversely, a sudden break above $2.7K would pave the way for further gains, which could lead to a rally towards the $3K threshold. As a result, the next price movement will provide important information about the next trend of Ethereum.

By Shayan

As Ethereum approaches a substantial resistance region around $2.7K, futures market analysis provides essential information on potential price direction over the coming days. The Binance Liquidation Heat Map highlights critical liquidity pools that represent a concentration of stop-loss orders and liquidation levels of futures positions.

The chart reveals a remarkably concentrated pool of liquidity just above the $2.7K resistance region, indicating many short positions clustered in this area. This is important because liquidations amplify price movements when prices approach these levels, causing a liquidation cascade. In this case, a potential break above $2.7K would likely lead to the liquidation of many short positions, increasing buying pressure and driving the price even higher.

However, there is also the possibility of a false breakout, leading to a bull trap. In these scenarios, larger market participants or whales can exploit the high liquidity by executing large trades that briefly drive the price above $2.7K, only to quickly reverse the trend. This rapid price reversal could catch overleveraged traders off guard, sending the price of Ethereum back below $2.7k and catching buyers who were anticipating a sustained breakout.

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